Aldi's Strategy: Westward, Ho!

Aldi's expansion plans are bigger than Texas.

Aldi is preparing to open its first Texas stores on Thursday but its western expansion is not likely to stop there.

The Texas move is important in itself. Aldi is planning to open about 100 stores this year; of these, 27 of those are slated for the Lone Star State. On Thursday, 11 will open in the Dallas-Fort Worth area. Following that, nine more Texas locations open in April and seven follow in May. With the openings, Texas becomes the westernmost state in which Aldi operates.

Aldi has ratcheted up its store expansion over the past three years, launching 100 of its discount food and general merchandise operations in 2008 and 80 last year. The pattern of its recent openings suggests that Aldi won't pause long before looking for fresh turf. It went into Florida and Rhode Island and Massachusetts in 2009. East of the Mississippi, only Louisiana, New Hampshire and Maine lack Aldi operations.

The southwest is likely to be next. Even if Aldi will not say so, its actions speak loudly. For instance, it has developed a line of Hispanic products for its Texas stores that could serve it well in New Mexico and Arizona, which both have large Hispanic populations, and beyond. Although the Latino-oriented selection is only a couple of dozen products, that's significant given the retailer's strictly limited 1,400-product line up.
It's interesting, too, that the distribution center that serves the Texas launch is Aldi's northernmost facility; located in Denton, it is closer to New Mexico than it is to Houston. One distribution center can supply as many as 60 stores; that gives the retailer flexibility to expand in Texas or beyond.

Since Aldi made its United States debut in Iowa in 1976, it has expanded cautiously, spokeswoman Heather Tarczan pointed, out, crossing state borders in steady steps, not in leaps and bounds. Given that, the southwest and then the west coast is almost certainly in its sights, as as BNET's Ian Ritter has recommended.
"We have no plans to be in Washington State or California right now," Tarczan said, "but that's not saying that in a few years we won't be."